Opec, the 11-nation cartel of oil producers, looked certain last night to agree to cut production by a million barrels a day after Saudi Arabia threw its weight behind the move.
The kingdom, the world's largest producer, had been silent in the run-up to yesterday's emergency meeting, which observers saw as a sign of opposition to the move.
But as Ali al-Naimi, its oil minister, arrived for the gathering in the Qatari capital of Doha, he said he stood fully behind the planned reduction and suggested a deeper cut could follow when Opec met in Nigeria in December.
"For now we believe a million barrels from actual production will be meaningful and we have plenty of time to discuss additional cuts when we meet in Abuja," he said.
Oil ministers were forced to take action after oil prices had slumped by more than 25 per cent within the space of just two weeks.
A combination of downbeat assessments of the outlook for the world economy, rising levels of stocks in the US and apparent divisions between the Opec members had helped push the oil price below $58 a barrel.
Yesterday the price broke back through $60 in Asian trading ahead of the meeting. Analysts said the market had latched on to Mr al-Naimi's hint that Opec was planning a further cut, perhaps by another 500,000 barrels a day, in December.
"A one million-barrel cut is already discounted by the market," said Edward Meir, an energy analyst at MAN Financial. "The markets will attach more importance to the cartel's communiqué, as they attempt to gauge how united the cartel is, where the cut is coming from and how prepared the cartel is to make a future cut."
Iran and Venezuela, struggling to meet their quotas, are wary of a cut based on actual supply that would see them ceding market share to other producers, notably Algeria, that are pumping way in excess of their official limits. But most in Opec, which pumps over a third of the world's oil, say a reduction must come from real output to be credible, effectively scrubbing out existing quotas.
Some members argue a reduction of more than a million barrels is needed to put a floor under prices.
Edmund Daukoru, Opec's president, said that a million-barrel cut would be the "minimum outcome" of the meeting. "We will be selling ourselves short unless we reach an agreement and issue a clear and credible statement at the end," he said. "Market conditions dictated we had to meet."Reuse content